Correlation Between Smith Nephew and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Smith Nephew and Dow Jones at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Smith Nephew and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Nephew SNATS and Dow Jones Industrial, you can compare the effects of market volatilities on Smith Nephew and Dow Jones and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Smith Nephew with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Nephew and Dow Jones.
Diversification Opportunities for Smith Nephew and Dow Jones
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smith and Dow is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Smith Nephew SNATS and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Smith Nephew is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Smith Nephew SNATS are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Smith Nephew i.e., Smith Nephew and Dow Jones go up and down completely randomly.
Pair Corralation between Smith Nephew and Dow Jones
Considering the 90-day investment horizon Smith Nephew SNATS is expected to generate 1.58 times more return on investment than Dow Jones. However, Smith Nephew is 1.58 times more volatile than Dow Jones Industrial. It trades about 0.14 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 2,454 in Smith Nephew SNATS on October 22, 2024 and sell it today you would earn a total of 75.00 from holding Smith Nephew SNATS or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smith Nephew SNATS vs. Dow Jones Industrial
Performance |
| Timeline |
Smith Nephew and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Smith Nephew SNATS
Pair trading matchups for Smith Nephew
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Smith Nephew and Dow Jones
The main advantage of trading using opposite Smith Nephew and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Nephew position performs unexpectedly, Dow Jones can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dow Jones will offset losses from the drop in Dow Jones' long position.| Smith Nephew vs. CochLear Ltd ADR | Smith Nephew vs. Integer Holdings Corp | Smith Nephew vs. Orthofix Medical | Smith Nephew vs. Glaukos Corp |
| Dow Jones vs. Nasdaq Inc | Dow Jones vs. Summit Materials | Dow Jones vs. Vulcan Materials | Dow Jones vs. Celsius Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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